SCOTTSDALE, Ariz. (PRWEB) December 21, 2012
We all know December 31 is the deadline for lawmakers to reach a deal to avert the “fiscal cliff” and avoid paying higher taxes in 2013. The end of the year also presents all of us with a valuable opportunity to re-examine our finances to take the best advantage of current tax laws and prepare for the future.
“We have all been so caught up following the fiscal cliff negotiations, many of us have forgotten there are things we can do before Midnight, December 31 in order to pay less taxes and put us in a better financial situation in 2013,” says Heath Bray, Vice President and Senior Financial Advisor at WealthTrust-Arizona, a wealth management firm with offices in Scottsdale and Chandler, Arizona.
Here are five tips to consider before we usher in 2013:
Charitable donations: “If you want to take advantage of the tax benefits of making a charitable donation, your donation must be made to a qualified organization before the end of the day on December 31,” Bray says, adding, “and do not forget to save your donation receipt.”
Flexible spending and dependent care accounts: If you have contributed to a flexible spending account (FSA) or a dependent care account this year, make sure the account is emptied before the end of the year. Due to the IRS “use it or lose it” rule, you will forfeit any money remaining in the account.
Selling investments: “If you have investments you plan to sell in the near future, and you do not think a fiscal cliff deal will be reached before January 1, you might want to consider selling those investments now,” Bray says, adding, “because capital gains taxes will go up next year.”
Year-end bonuses: If Bush-era tax cuts expire on December 31, rates will go up the next day. If you receive a year-end bonus, it will be taxed at the current rates. However, if you think you might be in a lower tax bracket in 2013, you should consider deferring your bonus until after the New Year, to put yourself in a more advantageous tax situation.
Energy-efficiency upgrades: “If you are planning on making energy-efficient upgrades to your home or business, you might want to consider fast-tracking them this month to take advantage of the many federal and state tax credits which are available,” Bray recommends.
Of course, individual situations will vary, so when it comes to minimizing your tax obligation, the best advice is to consult with a CPA or other tax professional.
WealthTrust-Arizona is a fee-based investment advisory firm specializing in the integration of investment management with estate planning for high-net-worth individuals and families. Services include portfolio management, estate planning, asset and lifestyle preservation, investment taxation planning, access to trust and estate documentation preparation, business succession planning and more. The professionals at WealthTrust-Arizona are frequently sought out by national media outlets such as The Wall Street Journal, Forbes, The New York Times, CNBC, SmartMoney, Kiplinger’s Personal Finance, Fox Business Network and others to share their thoughts on matters that impact affluent investors. For more information about WealthTrust-Arizona visit http://www.wealthtrust-arizona.com.